Wells Fargo: The Federal Reserve will not cut interest rates soon, the dollar will further strengthen

Wells Fargo stated that in the absence of a catalyst to trigger a reversal, the current theme of dollar strengthening and arbitrage operations may continue. "As other G10 central banks cut interest rates before the Federal Reserve possibly takes action in September, the expanded spread could further support the dollar," said Chidu Narayanan, chief Asia-Pacific strategist at Wells Fargo based in Singapore. Narayanan added that next week's CPI inflation data will be key and given there is no overall risk of economic recession, he remains optimistic about short-term arbitrage prospects.